Description: Get to know what you should do when you have become overwhelmed with your credit card debt burden.
Do you carry more than three credit cards that frequently have a balance every month? Are you using a cash advance on one of your credit cards to make the minimum payments every month? Are you using credit cards for your day to day living expenses? If your answer is “yes” to any of the above questions, you might have severe problem arising from credit card debts.
Credit card debts can cause significant problems in handling your finances since this is a type of revolving debt that has a variable interest rate. In the event of a nonpayment or default, the interest rate increases drastically. This contributes to further accumulation of debt since the interest is charged on the entire unpaid balance. Lagging behind on your card payments can make your credit card debt go out of control. If you’ve piled up a huge amount of credit card debt and are looking for ways to get rid of that debt burden, you can follow the tips given below:
Pay off your credit cards
Always try to pay off all your cards in full. This would most likely necessitate you to raise your income (a second employment or working overtime) and cut down on your monthly expenses. Devise a personal budget to ascertain if this can be done. If you can’t practically anticipate to pay off your cards within the next two years, you should go for the following option.
Go for a debt management plan
You can talk to a credit counselor for enrolling into a debt management plan (DMP). Under a debt management plan, you make a monthly payment to the credit counselor and this payment is distributed among all your creditors. Usually, a debt management plan can make you debt free in 3-5 years. If you don’t think this is a suitable option for you, you can go for the next option.
Consider credit card debt settlement
Make a request to your credit card companies that you want to settle your credit card debts. Make the proposal in writing and send it to the companies. Chances are most of them would agree to this offer. Under credit card debt settlement, you promise to pay a part of your overall outstanding balance which the creditors accept as full payment. They might not receive all their money, but they know they wouldn’t receive anything if you file for bankruptcy.
Think about bankruptcy
At all times, bankruptcy should be your last resort. A bankruptcy eliminates most of your debts and offers you a clean slate. However, a bankruptcy can spoil your credit for 10 years and has other negative outcomes. To determine whether bankruptcy is the right choice for you, talk to a bankruptcy attorney in your neighborhood.
If you’re overwhelmed with credit card debts, the most valuable advice is to deal with it right away. With every day passing by, your condition deteriorates, hence act immediately. Make a new beginning and take control of your finances.
